Stock Market News Today:
The latest earnings reports for members of the Faang group of tech giants — Facebook, Amazon, Apple, Netflix and Google — are making what has been a winning trade for investors look more complex. Amazon blew past Wall Street forecasts on Thursday as its diversification into higher-margin cloud computing and the dominance of its online retail business produced the first $2bn quarterly profit in its history.
The second-quarter results were a bright spot in an otherwise gloomy week for the technology sector, coming a day after Facebook stunned investors with a prediction of slowing growth, sending its shares down nearly 20 per cent and wiping more than $120bn from its market capitalisation.
Amazon, which only crossed the $1bn mark for quarterly profit at the end of last year, reported $2.5bn in net income in the quarter ending in June. The company’s shares surged 4 per cent in after-hours trading despite revenue missing analysts’ expectations.
Mueller eyes Trump tweets
Donald Trump has used Twitter as a key public relations weapon, but the president’s attacks on senior officials including the attorney-general and the FBI director are now being scrutinised by special counsel Robert Mueller as potential obstructions to his investigation.
China’s blocking of chip merger changes M&A landscape
Beijing’s decision to not allow the Qualcomm-NXP merger killed what would have been a transformative deal for Qualcomm and threatens to change the mergers and acquisitions landscape for US technology companies.
North Korea hands over remains
North Korea has handed over the remains of 50 US soldiers killed during the Korean war 65 years after the conflict ended, as relations between the two nations continued to thaw following last month’s historic Singapore summit.
US GDP boost
New data on Friday are expected to show renewed momentum in consumer spending, growth in capital expenditures and a net boost from trade. The top economic adviser to the president said the figures would be “big”. Economists predict GDP expanded at a 4.2 per cent annualised rate, compared with a 2 per cent increase at the start of the year. (FT)
Stock markets are rising in Europe, amid continuing optimism after the agreement between the EU and US to suspend new tariffs as trade talks continue, and on supportive earnings news.
Shares in BT, Reckitt Benckiser and BBVA are all higher after the publication of their latest results, with the Europe-wide Stoxx 600 up 0.4 per cent overall.
The improving mood faces a test from US growth data for the second quarter, which is expected to show growth of 4.1 per cent, and is due at 1.30pm. Before its release, Wall Street futures expect the S&P 500 to tick up 0.1 per cent.
“We expect that [US] GDP growth picked up strongly in Q2 after a lacklustre start to the year, fuelled by a rebound in consumer spending and a surprise narrowing of the trade balance.
“We forecast headline growth of 4.4%. This is likely to mark a peak in growth momentum, and we expect some moderation in the quarters ahead.”
CATHERINE MCLEAN TRACHSLER — CREDIT SUISSE
Meanwhile, technology stocks remain in focus following Facebook’s record fall after it warned of slowing user and sales growth.
Europe’s technology sector consists mainly of hardware makers rather than social media networks or content providers, but nonetheless its shares are under pressure. The Stoxx index tracking the sector is flat, leaving it out of the wider upbeat trend.
Oil prices are drifting lower after climbing in the wake of Saudi Arabia’s move earlier in the week to suspend oil shipments through the Red Sea following an attack from Yemeni Houthi rebels on two of its giant crude carriers.
Brent crude, the international benchmark, is down 0.1 per cent at $74.47.
Gold is up 0.2 per cent to $1,224.12 per ounce.